Ukraine should forget about the money the IMF

23.08.2016

Tags: Ukraine, Economy, Credit, IMF, Analytics, tariffs, EU

Chances of Kiev to receive this year at least some money from the IMF are melting before our eyes. Consideration of relevant issues in the fund again postponed, and the US ambassador in Kiev believes that Ukraine is no longer need any credit. And while the real state of the Ukrainian economy in failure, it can be said that the ambassador to some extent right. Though not for the reason you have in mind.

The International Monetary Fund (IMF) has again postponed consideration of allocation of the next tranche of Ukraine, UNIAN reports. Until the end of August the fund's board of directors will discuss the allocation of money to other countries, but not Ukraine. In particular, 22 August the IMF will consider the allocation of money to Barbados, 24 of August - Jordan, 29 of August - Equatorial Guinea, 31 of August - Serbia. Ukraine is not on the agenda.

Meanwhile, just in July Ukrainian Prime Minister Vladimir Groisman, being in Brussels insisted that Kiev has fulfilled all the activities envisaged by the Memorandum of Cooperation with the IMF, with only "a few technical details." Minister of Finance of Ukraine Alexander Danyluk, in turn, said that the tranche from the IMF will arrive in early August. But Ukrainian accounts it never came.

On Friday, the President of Ukraine Petro Poroshenko spoke by phone with US Vice President Joseph Biden on the same topic. The sides discussed the importance of providing in the near future Ukraine tranche of the IMF and the US credit guarantees, said on the website of the Ukrainian president. However, everything indicates that the IMF provide new loans Ukraine does not want to. Especially if we remember that the last time the fund has given money to Kiev in August 2015 years, and it was late. And a year leads the IMF Ukrainian politicians by the nose, promising about to solve the problem.

US Ambassador to Ukraine Jeffrey Payette explained the delay in his own way. According to him, Ukraine at the moment, it appears, and do not need the next tranche of the IMF. "From a practical point of view, today Ukraine does not need IMF tranche. The exchange rate is stable, reserves enough trust is still there, "- Payette said. According to him, the IMF approached with caution to suspension of payments, so as not to destroy the credibility of Kiev and at the same time stress that adheres to its own rules.

Formally, the IMF really has a reason not to rush with the issuance of loans to Ukraine. The fact is that the extended credit program is designed to stabilize the economies that have serious problems with the balance of payments. Ukraine also shows formally stable indicators - in terms of currency (the hryvnia does not devalue as quickly as in the previous two years), a good gold and foreign currency reserve (14 billion dollars), and overall the balance of payments deficit has decreased. Ukrainian authorities now and then talk about the beginning of economic growth (in the second quarter there was a plus) and even about the growth of nominal wages.

In reality, of course, behind those numbers there is no growth and improvement of the economic situation. We can only speak about the fading rapid fall.

But the IMF fits to everything formally. For example, Ukraine's balance of payments in the first quarter of 2016 was reduced to a deficit of 813 million dollars. This is a bit, considering that in 2014 and 2015 years the deficit reached 4 and 8 billion dollars. But if you compare with the first quarter of 2013, when the balance of payments was with a surplus of 1,82 billion dollars, it is clear, how sad the economy of Ukraine is. If you dig deeper, it becomes clear that a small deficit this year provides an ongoing drop in imports (residents can not afford to buy foreign) and exports (the country's revenues have drastically slipped). In the first quarter of 2013, imports were more than 22 billion dollars, in the first quarter of 2016 year - 11 billion dollars, exports were 19 billion, now 9,8 billion dollars.

Financial account balance of payments, which shows the flow of investment into the country, for the first quarter also became positive - plus 260 million. But the IMF did not seem to notice that in 2013-m for the same period he was almost 5 billion dollars plus.

Exactly the same way the IMF approached and approached the requirements to Ukraine. The most indicative situation with tariffs for gas and housing services. Back in the 2014 year, the fund was outraged by the fact that Ukrainians spend less on HCS than, for example, the citizens of Poland. More correctly, the share of communal expenses in the expenses of Ukrainians was less than that of the Poles. The fund insisted to correct such injustice, namely - to be from state subsidies for payment of housing services. Kiev obeyed. "Now that the IMF reforms have increased 10 times after the IMF reforms, the IMF no longer makes an analysis of Ukrainians' expenditures on housing and communal services. Because even the most optimistic calculations show that the average Ukrainian family spends about 60% of their income on housing and communal services in the winter, and now, after the next increase in housing and utilities tariffs, it will turn out in general a curiosity. The average patch in Ukraine will be less than the average amount of payments for paying utility bills, "- says Ukrainian economist Alexander Okhrimenko.

Tariffs for housing and communal services Ukrainians have become almost the same as in Europe. "But the salary in Ukraine is much lower than in the EU, but the IMF is to focus not notice" - indicates the Ukrainian economist.

He does not notice the IMF and that the gas market to maintain a monopoly in the face of Naftogaz, although the fund insisted on the reform of this system. "National Anti-Corruption Bureau of Ukraine pretends he does not see. As a result, buying gas from Russia through the European offshore and gas tariffs for the population too high several times. Monopolists for housing market get super profits ", - adds Okhrimenko.

Thus, the IMF only pretends that the economic situation has stabilized in the Ukraine. Because it's not the economy, and in politics. Beneficiaries of the IMF - the US and the EU - just do not want to feed more than Ukraine. Apparently, for their political goals Ukraine is better to be destroyed. Because if you look closely, it is not only the IMF did not fulfill all these years their promises to inject huge sums, but also the US and the EU.

For example, the EU has promised to Maidan after 3 billion euros in macro-financial assistance. Dahl is only 2 billion euros. The EU also promised through the Neighbourhood Investment Facility to 3,5 billion euros, but Kiev has not received the money. European Investment Bank and the European Bank for Reconstruction and Development pledged about 8 billion euros of loans, but no one eurocent, the Ukrainian government has not received July 2016 years. About fake preferential trade and visa-free regime with the EU can not recall.

In Kiev also see a couple of the political reasons for the delay tranche from the IMF. First, the IMF wants to get ready for the draft budget for the year 2017. Provision Is there, for example, further increase in gas tariffs and the reduction of subsidies for the poor? In Kiev, promise to create a budget in September, but usually delay the matter until 20-th of December. In Kiev, also insist that the IMF is unhappy with the situation with the launch of e-declaration of income of officials.

Kiev still continue to wait and hope for another handout from the IMF. Thus, Ukraine's finance minister complained that in the event of breakdown of cooperation with the IMF will have to cut the budget and to make unpopular decisions.

In addition, without the IMF, Ukraine will not be able to receive 1 billion dollars of loan guarantees from the US, 1,2 billion euros of macro-financial support from the EU, as well as loans to buy gas from European partners, the minister said. "Cooperation with the IMF is not only this year's task. The IMF does not just support our reform program. Each tranche of the IMF is a clear signal to investors that changes are taking place and that money can be invested in Ukraine, "the minister asserts. The US ambassador to Ukraine would probably not agree with this, because it turns out from his bell tower that the IMF does not give Kiev money just for the opposite reason - because the Ukrainian economy is already so good already.

"In my opinion, in your own words Payette Ukraine prepares to that tranche of the IMF, likely before the end of the year did not go. Of course, in the words of Payette there is some deceit about the state of the Ukrainian economy ", - says Sergei Zvenigorod of the Criminal Code" Solid Management ".

However, the IMF had, without realizing it, makes Ukraine a big favor by not giving out loans. And it would be better to continue the IMF did not want to give them. "Possible IMF refusal to provide the next tranche really looks good for the economy because tranche - is a loan, not a charity," - I agree Zvenigorod. International reserves of Ukraine in recent years show a positive trend in July were almost 14 billion dollars. However, this is still not enough to cover the country's external debt, which is already exceeded 70 billion dollars.

Of course, you can continue to live at the expense of loans in the hope that in the future the country's economic miracle will happen or ever IMF write off these debts. However, it must also pay for debt relief so strong organizations.

"The practice of developing countries shows that all loans made by the World Bank or the IMF, and then written off, only led to the aggravation of problems in the economy and to domination of the country the role of transnational corporations in Europe and the United States. For the experts agreed such loans even have a special term, "economic hit men", - says Alexei Antonov of "Alor Broker".

At the same time money from the IMF - is not foreign direct investment, and they do not reach the real economy. Some of them are going to pay for the "old" debts to the IMF, a part - to replenish the gold reserves, the rest - on the war in the Donbas and in the pockets of Ukrainian oligarchs. In other words, these loans do not change the situation in the country, but are forced to do a lot of the Ukrainian authorities is extremely painful for the steps of the economy. And most importantly, that the dollar is stretched bondage for decades, will have to pay the bills yet not one generation of Ukrainians.

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